With improvement in economic activity and revival of sentiments, the RBI today said GDP growth in the current fiscal is expected to go up to 5.5 per cent from 4.7 per cent in last financial year.

"The implementation of government policy actions that have been announced should create a congenial setting for a steady improvement in domestic demand and supply conditions," RBI said in its bi-monthly policy statement.

Sentiments on domestic economic activity appear to be reviving, RBI said, adding that there are early signs of modest strengthening of corporate sales and business flows.

"Prospects of re-invigoration of growth have improved modestly... The central estimate of real GDP growth of 5.5 per cent within a likely range of 5 to 6 per cent for 2014-15 can be sustained," it said.

Driven by improved performance of the manufacturing sector, industrial production growth soared to 19-month high of 4.7 per cent in May.

Also, India's export growth remained in double digit for the second month in a row at 10.22 per cent in June.

The firming up of export growth should support manufacturing and services sector, it said.

Further, the revival of investments, unblocking of stalled projects, pick-up in external demand and stabilisation in global crude prices could help achieve the growth estimates, RBI said.

As per the Finance Ministry estimates, GDP growth in the current fiscal is expected be in the range of 5.4-5.9 per cent.

In his maiden Budget, Finance Minister Arun Jaitley had announced a host of measures, including hiking tax exemption limit, incentives for the housing sector and relief in indirect taxes for auto and other sectors to promote industrial output and boost growth.